CA Inter FM Meaning And Component Of Working Capital | FM CAInter | Working Capital | Financial Management

CA Inter FM Meaning And Component Of Working Capital | FM CAInter | Working Capital | Financial Management

CA Inter FM Meaning And Component Of Working Capital | FM CAInter | Working Capital | Financial Management

CA Inter FM Meaning And Component Of Working Capital | FM CAInter | Working Capital | Financial Management

Basisof working capital. • Value :From the value point of view, Working Capital can be defined asGross Working Capital or Net Working Capital. Gross working capital refers to the firm’s investment in current assets. Net working capital refers to the difference between current assets and current liabilities. A positive working capital indicates the company’s ability to pay its short-term liabilities. On the other hand a negative working capital shows inability of an entity to meet its short-term liabilities. • Time: From the point of view of time, working capital can be divided into two categories viz., Permanent and Fluctuating(temporary).

Concept 2 Optimum Working Capital If a company’s current assets do not exceed its current liabilities, then it may run into trouble with creditors that want their money quickly. Current ratio (current assets/current liabilities) (along with acid test ratio to supplement it) has traditionally been considered the best indicator of the working capital situation. It is understood that a current ratio of 2 (two) for a manufacturing firm implies that the firm has an optimum amount of working capital. This is supplemented by Acid Test Ratio (Quick assets/Current liabilities) which should be at least 1 (one). Thus it is considered that there is a comfortable liquidity position if liquid current assets are equal to current liabilities. = However, it should be remembered that optimum working capital canbe determined only with reference to the particular circumstances of a specific situation. Thus, in a company where the inventories are easily saleable and the sundry debtors are as good as liquid cash, the current ratio may be lower than 2 and yet firm may be sound. In nutshell, a firm should have adequate working capital to run its business operations. Both excessive as well as inadequate working capital positions are dangerous. working capital,any time classes,atc,ca inter pendrive classes,financial management,ca inter,components of working capital,components of working capital in hindi,working capital,working capital management,accounts receivable,working capital calculation,working capital formula,working capital turnover ratio,working capital meaning,working capital requirement,working capital ratio,current assets,current liabilities,accounts payable,working capital cycle,operating cycle,working capital loan,working capital finance,estimated working capital,estimation of working capital,working capital estimation,working capital in hindi,working capital management in fm,working capital management for bcom,woring capital management for ca working capital calculation, working capital management, working capital formula, working capital turnover ratio, working capital meaning, working capital requirement, working capital ratio, current assets, current liabilities, accounts receivable, accounts payable, working capital cycle, operating cycle, working capital loan, working capital finance, estimated working capital, estimation of working capital, working capital management, working capital, working capital estimation, estimated working capital, working capital in hindi, working capital management in fm, working capital management for bcom, woring capital management for ca,any time classes,atc,ca inter pendrive classes,financial management,ca inter,components of working capital,components of working capital in hindi,working capital,working capital management,accounts receivable,working capital calculation,working capital formula,working capital turnover ratio,working capital meaning,working capital requirement,working capital ratio,current assets,current liabilities,accounts payable,working capital cycle,operating cycle,working capital loan,working capital finance,estimated working capital,estimation of working capital,working capital estimation,working capital in hindi,working capital management in fm,working capital management for bcom,woring capital management for ca Important Playlist Financial Management - http://bit.ly/FM_Playlist Revision Class SM 2019 Nov - http://bit.ly/SM_Revision_Playlist Strategic Management Old Syllabus - http://bit.ly/SM_Old_Syllabus_Playlist Strategic Management - http://bit.ly/SM_Playlist Make sure to Like & Share this video. Also You Can Comment If You Have Any Doubt. Other Great Resources ATC - Android Application - http://bit.ly/atc-application ATC- Any Time Classes - https://www.cainter.atcanytimeclasses.com/ Follow Us: Pinterest - https://in.pinterest.com/psrathore146/ Instagram - https://www.instagram.com/psrathore1/ Facebook – https://www.facebook.com/psrathore01 Google My Business – https://anytimeclasses.business.site/ Twitter - https://twitter.com/psrathore1 Linkedin - https://in.linkedin.com/in/ps-rathore-7469a110